⌛ Do's and Dont's about real estate

For many it is the ultimate dream to own their own place at there vacation-destination.
For many it also becomes a nightmare.
Even we can find some information on this topic on other threads in this forum it might be a good idee to bring together some experiences or advices of our forummembers.
First of all be very very carefull in dealing with real estate.
Espesialy in buying a property there is a lot of money involved so you better think it over more than twice before taking a desision.
Buying property in the Philippines is quiet different from some western country's.
In Belgium for instance you let the whole procedure to be done by a notary without thinking that something can go wrong, in the Philippines you have to think all the time that something can go wrong.
Is this an advice not to start in the first place? No, there are some advantages and those of us who are now the proud owner of a well documented property will tell you the same.
Bear in mind that as a foreigner you cannot buy some land directly in your name, but there are "backdoors', a corporation for instance but there are more posibility's
As a foreigner you can fully own a condominium under certain circumstances but in Dumaguete there are not that many condominium for sale anyway.
I guess this is a topic mostly for "longnose" and i apologise in advance to our Philippino members and readers but i'm sure that everybody can learn something sooner or later if enough people are willing to share their experiences or give some advice to inocent candidate buyers.

 

How to recognise a clean tittle:
It seems that half the population is a freelance broker.
If people think that you have money, you certainly got visits from this would-be-brokers.
They are only interested in getting a commission and most likely they are not qualified as brokers.
The first thing they say: You buy a lot Sir,it's a clean tittle.
What is a clean tittle?
Just ask it to the freelance broker.
The answer is always that a clean tittle is a tittle of wich the owner has no loan on the property and has used it as collateral.
This is bullshit, if somebody gets a loan with some land as collateral, the bank or the private person will keep the tittle as collateral and the owner will no longer have the tittle untill the full amount of the loan is paid back.
In reality it is having a tittle or not having a tittle.
So in fact it is more important to look at the tittle itself than relying on the clean tittle thing.
If somebody approaches you to buy a lot, more than 50 % is a problem they want to sell you, and you can see it within a few minutes and you don't have to be an expert.
First look at the date that the title was made, ask the broker how old the seller is and most likely the tittle will be older than the (estimated) age of the seller.
This is the most comon problem in real estate land.
Someone trying to sell some land from their parents after they passed away.
You will run in trouble and are busy for a few years and spend a lot of money on lawyers to get the tittle transferred because mostly there are several heirs and each one of them must agree with the sale. Sometimes one or more heirs are abroad and are even not aware of the fact that one of their brothers or sisters is selling this land.
Don't get involved
A second problem that you can recognise in a tittle but will take a little longer to find is agrarian land.
CARP (Comprehensive Agrarian Reform Program) exist 20 years now and under this program, farmers are alowed to sell the land that they got for free under that program but better don't get involved in it if you want a sound sleep for the next 20 years.
But it is not only CARP that gives problems, if you see any words as "agrarian" in the tittle don't get involved at all or ask for professional advice.
In more rural places there are no tittles but taxdeclarations, this is legal but if you ever want to change your taxdeclaration in a tittle it will give you a lot of headache and it will cost you a lot of money.
Don'tget involved.
And last, the ever returning "Right of way"
Many property's are connected to a road with a right of way. It is always cheaper to buy such land but most likely it is also a way of running in trouble, small problems that never end, and causes you most probably high blood.
Don't get involved.

 

Don't Don't Don't are there also some do's?
Yes.
Do your homework, be patient, talk to people.
When people buy some supermarketstuff they look quit often for a discount of 2 or 3 pesos.
When buying property they spend hundreds of thousands of pesos just believing the first person who offers them "a good deal"
Sounds familiar?
Yes you have read this sentence over and over again and get bored of it.
And yes there are everyday people who make the same mistake.
Do buy house and lot instead of a lot alone, if you run in trouble with the lot, you might not get a buildingpermit for many years, if you run in trouble getting a tittle with your house and lot, at least you have a house to live in.
Do visit some banks, they all have forclosed property's they are selling and all paperwork is included. That means when you buy a forclosed property from the bank, it is included paperwork to produce the tittle, problems in this case are very very rear and you get the tittle without running around from office to office.
Perhaps You will not find what You are looking for in a bank but it doesn't cost you anything and at least you will learn something what is the askingprice for certain property's.
If somebody is offering you "a very good deal" do be suspicous.
Forget about "real marked value" this is not the actual price that property-owners are asking when selling some property. It is the standard that BIR is using for taxation on the transfer of tittle and is something in the neighbourhood of 35 % of the real value.
And like alway's exeptions are confirming the rule.

 

Please ignore the term "real market value" in my last post the correct term is "fair market value"
My apologise for this.

A foreigner cannot buy land in the Philippines.

It is true that a foreigner cannot buy land in his own name but there are "constructions"
The most common used "construction" is that the Philippina or Philippino partner is buying land with her or his partners money. It is also the most risky.
The office of deed of sale is also demanding an affidavit in which it is stated that:
"The funds used in buying said real property are personal funds and not conjugal funds"
Lets face it , mariages and live-inn partnerships get stranded so now and then.
When you are deeply in love you might not think about it but when things go wrong the consequences are quite often devastating.
I don't want to be the bad guy who is negative on any aspect of society that's why i will not go deeper in on this "construction"
Another "construction" is starting a corporation but to do so you'l need a lawyer and sometimes it is not worth the trouble.
Also possible is to ask "any guy" to buy this land in his or her name and at the same time you make a contract whereinn it is stated that "the guy" has borrowed from you the same amount as that you have spend and that the total amount will be paid back within 5 years with an intrest of 20 % per year.
You pay "the guy" 5000 pesos for his help and you can be sure that you can use the land for generations to come. It may sound risky business and in a certain way it is but it is legal.
Of course you are the one to keep the tittle in the meantime not "the guy"
If you want to know more about this "construction" ask any lawyer they can give you all fine details.
The latest "construction fashion" seems to be that foreigners buy land or property with "a little help" from the bank. Just ask in any bank how it works to buy property in their name and make sure that you don"t run in trouble including a contract that states that you can sell,transfer or get it inherited in a near or far future.
This latest construction that seems more and more popular among foreigners seems the least risky if you ask me as long a verry correct contract is made.

 

Now that I have learned about this 'reputation' concept from another thread, I decided to pass some along to you, Firefly. Good information for prospective buyers.

 

When buying or renting / leasing real estate, most probably you will have to sign a contract.
In order to be prepared and avoid mistakes look what you may expect on this site:
Free Legal Forms & Contracts - Philippines
You will find all kinds of contract and it will help you to be in a stronger position against the one that will ask you to sign
The forms are free to copy or use them, nothing to loose.

 

firefly...you've given a lot of helpful advice but I take a bit of issue with the one giving a couple methods of circumventing the law that a foreigner cannot buy land in the Philippines. It is my understanding of the law that any action taken to circumvent that law by using proxies, arms-length financiers, corporations..ad nauseum...will easily be rejected in court for what it is....an obvious circumvention of the law. There would be likely hundreds, if not thousands, of foreigners who have wound up being screwed with razor wire by trying to twist the property ownership laws. Only Filipinos, and particularly judges and lawyers, are allowed to twist the law. I wouldn't touch any of these convoluted plots with a barge-pole...

 

Garbonzo,
In my explanation about how to use a "construction" in buying real estate i mention more than once that it is better to ask a lawyer for advice.
Also banks who are willing to help you in this matter use the advice of a lawyer.

 

Thanks firefly...but in general (I admit I'm generalizing here - but it's a fairly safe one)...Philippine lawyers are scum...they will tell you anything you want to hear for quite a few pesos - and then lose the case. If you give enough pesos they will sing like Andrea Bocelli - and still lose the case. If you want to make the lawyer a millionaire...you can appeal...and lose some more. If you attempt to circumvent Philippine property law - no matter how well you've been advised and encouraged to do it - you will lose. I have never heard of someone winning in the end. Of course you could sue the original lawyer - by paying another lawyer - LOL....dig deep in those pockets....

The only good news on a very vague horizon is that the last couple years the issue of foreign ownership has been getting more attention with the government. I expect there will be some sort of eventual justice coming forth where a foreigner will get to own a small lot and house. Of course whether that lot has proper legal title etc.....maybe only leads to more dramas.....LOL....

 

you have many good point. Just in all "construction" cases it is still the land of someone else and you are allowed to use it.

Making the deal with "the guy" will give you another contract (or you keep his papers), but your own name will never be on the land-title as a foreign single person, and if so you can basically throw it away as it is not legal.

The only way you are allowed to own land legally is if your Philippine wife is the owner and dies, than you can get the title. (I heard it's also possible w/ 5000 peso to a guy)